7 ms·
An inverted yield curve has accurately predicted 9 out of the last 5 recessions ;) You can even see it on the chart in the linked article, in 2005/06 — that ti
by hhmc 5y ago
An inverted yield curve has accurately predicted 9 out of the last 5 recessions ;)
You can even see it on the chart in the linked article, in 2005/06 — that time, it was different.
- 55555 5y agoThat's not that bad! Still seems potentially very useful.
- ZephyrBlu 5y ago9/5 is terrible accuracy.
- dannyw 5y agoIn the investment industry, 9/5 is excellent.
- hdjjhhvvhga 5y agoHow do you mean? Looks like an equivalent of a coin flip to me.
- harimau777 5y agoI'm not super knowledgeable in this area, but one possibility is that the "9 of the 5" only gives the number of times that it predicted that there would be a recession. There could be many more times that it accurately predicted that there would not be a recession.
- 55555 5y agoIf you flipped a coin every day in order to determine whether or not a recession would start, you'd be wrong 99% of the time.
- josephcsible 5y agoHow do you figure? Wouldn't you be wrong 50% of the time?
- chii 5y agoit's approximately 50/50. You're almost just as good with a coinflip.
- dannyw 5y agoA coinflip would be a 3650/5 or so. A biased coinflip that gives 5 signals would be 5/0.
- ItsMonkk 5y agoFed Fund Rate vs 30YT since 1970(only cherry picking this year because the data on fred is poor before this period, and end of gold standard is significant) is a perfect 8/8[0]. [0]: https://fred.stlouisfed.org/graph/?g=ENDs https://fred.stlouisfed.org/graph/?g=ENDs
- thissuchness 5y agoAnd how many degrees of freedom went into the choice of metrics to compare? Just because something went 8/8 doesn't mean it will predict the future crashes.
- ItsMonkk 5y agoI'd argue that minimum time frame -> maximum time frame is a more fundamental metric than any other individual yield curve.
- bruce343434 5y agoWhich curve am I looking at and for what? The blue line dips a lot of times, but only sometimes does a dip coincide with a recession.
- SantalBlush 5y agoThis "9 out of the last 5" quote is the deadest of beaten horses on HN. It shows up at least once a week here, and it is written with such smugness and unoriginality that it makes even dad jokes funny by comparison. Let's cut to the chase and make a bot that posts "9 out of the last 5 recessions, hyuk!" on every post remotely related to finance and be done with it. It is the furthest thing from a substantive comment; it is a recycled low-effort joke in the style of reddit.
- hans-moleman 5y ago9 out of 5 readers cringe at this type of comment. (I’ve never heard of the expression before so I found it amusing)
- SantalBlush 5y agoI agree that it's amusing the first time one reads it. But it is posted here a lot and has become very trite; it probably competes with Hanlon's razor in terms of frequency. After just a cursory search, here are some other examples: https://news.ycombinator.com/item?id=20372163 https://news.ycombinator.com/item?id=20372163 https://news.ycombinator.com/item?id=19995167 https://news.ycombinator.com/item?id=19995167 https://news.ycombinator.com/item?id=22352073 https://news.ycombinator.com/item?id=22352073 https://news.ycombinator.com/item?id=2127845 https://news.ycombinator.com/item?id=2127845 https://news.ycombinator.com/item?id=21023682 https://news.ycombinator.com/item?id=21023682 https://news.ycombinator.com/item?id=14417296 https://news.ycombinator.com/item?id=14417296 https://news.ycombinator.com/item?id=20641031 https://news.ycombinator.com/item?id=20641031 https://news.ycombinator.com/item?id=17266452 https://news.ycombinator.com/item?id=17266452 https://news.ycombinator.com/item?id=9476984 https://news.ycombinator.com/item?id=9476984 https://news.ycombinator.com/item?id=20656629 https://news.ycombinator.com/item?id=20656629 https://news.ycombinator.com/item?id=1628716 https://news.ycombinator.com/item?id=1628716
- greesil 5y agoMy interpretation is that it's not a joke, but instead a way to convey the heuristic can have false positives.
- mellavora 5y agoSo you are saying that a plausible mechanism leads to a ~50% prediction accuracy? I'm curious how this stacks up to the accuracy of other prediction methods? Off the cuff, this one doesn't seem too bad. esp given the stochastic nature of the variable being predicted.
- phreeza 5y ago"Accuracy" in statistical terms is likely even higher because that would include the predictions of "no upcoming recession".